REDWOOD CITY, Calif.--(EON: Enhanced Online News)--Box, Inc. (NYSE:BOX), a leading enterprise content platform, today
announced financial results for the third quarter of fiscal 2017, which
ended October 31, 2016.

“About
Non-GAAP Financial Measures and Other Key Metrics”

"In the third quarter, we delivered record revenue of $102.8 million, up
31% year-over-year, and continued to improve operational efficiencies
throughout the business," said Aaron Levie, co-founder and CEO of Box.
"We reached a significant milestone with our first $100 million quarter.
We also hosted our most successful BoxWorks to date and announced a new
strategic partnership with Google. With our track record of product
innovation and continued momentum with new and existing customers, Box
is uniquely positioned to help businesses modernize how they manage
information and transform how they work.”

“Our results this quarter were driven by our best-in-class retention
rate, strong sales execution, and increased adoption of our newer
products,” said Dylan Smith, co-founder and CFO of Box. “We also
demonstrated significant progress in cash flow from operations, driving
a year-over-year improvement of more than $10 million, and bringing us
closer to achieving positive free cash flow in the current quarter.”

Fiscal Third Quarter Financial Highlights

Revenue for the third quarter of fiscal 2017 was a record $102.8
million, an increase of 31% from the third quarter of fiscal 2016.

Deferred revenue for the third quarter of fiscal 2017 ended at $192.6
million, an increase of 36% from the third quarter of fiscal 2016.

Billings in the third quarter of fiscal 2017 were $112.4 million, an
increase of 26% from the third quarter of fiscal 2016.

GAAP operating loss in the third quarter of fiscal 2017 was $37.8
million, or 37% of revenue. This compares to GAAP operating loss of
$55.0 million, or 70% of revenue, in the third quarter of fiscal 2016.

Non-GAAP operating loss in the third quarter of fiscal 2017 was $17.3
million, or 17% of revenue. This compares to non-GAAP operating loss
of $37.9 million, or 48% of revenue, in the third quarter of fiscal
2016.

GAAP net loss per share, basic and diluted, in the third quarter of
fiscal 2017 was $0.30 on 128.3 million shares outstanding, compared to
$0.45 in the third quarter of fiscal 2016 on 121.8 million shares
outstanding.

Non-GAAP net loss per share, basic and diluted, in the third quarter
of fiscal 2017 was $0.14, compared to $0.31 in the third quarter of
fiscal 2016.

Net cash used in operating activities in the third quarter of fiscal
2017 totaled $6.8 million. This was a $10.5 million, or 61%,
improvement compared to net cash used in operating activities of $17.3
million in the third quarter of fiscal 2016.

Free cash flow in the third quarter of fiscal 2017 was negative $10.9
million, compared to negative $37.8 million, in the third quarter of
fiscal 2016.

Cash, cash equivalents, and restricted cash were $194.9 million as of
October 31, 2016, of which $27.1 million was restricted.

For more information on the non-GAAP financial measures and key metrics
discussed in this press release, please see the section titled, “About
Non-GAAP Financial Measures and Other Key Metrics,” and the
reconciliations of non-GAAP measures and certain key metrics to their
nearest comparable GAAP measures at the end of this press release.

Business Highlights since Last Earnings Release

Grew paying customer base to over 69,000 businesses
including new or expanded deployments with leading enterprises such as
Alexion Pharmaceuticals, the Consumer Financial Protection Bureau,
Hertz, HULU, KONICA MINOLTA JAPAN, INC, Southwest Airlines, and the
U.S. Department of the Treasury.

Announced a new strategic partnership
with Google, including deep integrations with G-Suite
(formerly Google Docs) and Google Springboard (enterprise search) to
bring together Box’s secure content management with Google’s
productivity applications and search capabilities.

Secured approval of European Union (EU) Binding Corporate Rules,
making Box one of very few companies to meet the global gold standard
for processing and transferring sensitive information outside of the
EU.

Revealed an all
new Box, which includes Box Relay, enhancements to the core
product, and a new version of Box Notes. Box Relay, the first Box
product co-developed with IBM, will make it simple for businesses to
build, track and manage their workflows, drive productivity and
standardize processes across the extended enterprise.

Hosted the most successful BoxWorks to date, which attracted
over 170 CIOs representing Fortune 1000 companies and featured
partners like Amazon, Google, IBM, and Microsoft.

Outlook

Issued Q4 FY17 Guidance: Revenue is expected to be in the
range of $108 million to $109 million. GAAP and non-GAAP basic and
diluted earnings per share is expected to be in the range of ($0.33)
to ($0.32) and ($0.14) to ($0.13), respectively. Weighted average
basic and diluted shares outstanding is expected to be approximately
130 million.

Raised Full Year FY17 Guidance: Revenue is expected to be in
the range of $397 million to $398 million, raised from previous
guidance of $394 million to $396 million. GAAP basic and diluted
earnings per share is expected to be in the range of ($1.24) to
($1.23), raised from previous guidance of ($1.30) to ($1.28). Non-GAAP
basic and diluted earnings per share is expected to be in the range of
($0.60) to ($0.59), raised from previous guidance of ($0.69) to
($0.67). Weighted average basic and diluted shares outstanding is
expected to be approximately 127 million.

All forward-looking non-GAAP financial measures contained in this
section titled “Outlook” exclude estimates for stock-based compensation
expense, intangible assets amortization and certain legal settlement
costs. Box has provided a reconciliation of GAAP to non-GAAP earnings
per share guidance at the end of this press release.

Webcast and Conference Call Information

Box’s management team will host a conference call today beginning at
2:00 PM (PT) / 5:00 PM (ET) to discuss Box’s financial results, business
highlights and future outlook. A live audio webcast of Box’s third
quarter of fiscal 2017 earnings call will be available through Box’s
Investor Relations website at www.box.com/investors
for a period of 90 days after the date of the call.

A telephonic replay of the call will be available approximately two
hours after the call and will run for one week. The replay can be
accessed by dialing:+ 1-855-859-2056 (U.S. and Canada), conference
ID: 12535958+ 1-404-537-3406 (international), conference ID:
12535958

Box has used, and intends to continue to use, its Investor Relations
website (www.box.com/investors),
as well as certain Twitter accounts (@boxhq, @levie and @boxincir), as
means of disclosing material non-public information and for complying
with its disclosure obligations under Regulation FD. Information on or
that can be accessed through Box’s Investor Relations website, these
Twitter accounts, or that is contained in any website to which a
hyperlink is provided herein is not part of this press release, and the
inclusion of Box’s Investor Relations website address, these Twitter
accounts, and any hyperlinks are only inactive textual references.

This press release, the financial tables, as well as other supplemental
information including the reconciliations of non-GAAP measures and
certain key metrics to their nearest comparable GAAP measures, are also
available on Box’s Investor Relations website. Box also provides
investor information, including news and commentary about Box’s business
and financial performance, Box’s filings with the Securities and
Exchange Commission, notices of investor events and Box’s press and
earnings releases, on Box’s Investor Relations website.

Forward-Looking Statements

This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding Box’s
expectations regarding the size of its market opportunity, the demand
for its products, its ability to scale its business, its ability to
achieve positive free cash flow, profitability, planned product
enhancements, benefits of such product enhancements, and success of
strategic partnerships, as well as expectations regarding revenue, GAAP
and non-GAAP earnings per share, the related components of GAAP and
non-GAAP earnings per share, and weighted average basic and diluted
outstanding share count expectations for Box’s fiscal fourth quarter and
full fiscal year 2017 in the section titled “Outlook” above. There are a
significant number of factors that could cause actual results to differ
materially from statements made in this press release, including: (1)
adverse changes in general economic or market conditions; (2) delays or
reductions in information technology spending; (3) factors related to
Box’s intensely competitive market, including but not limited to pricing
pressures, industry consolidation, entry of new competitors and new
applications and marketing initiatives by Box’s current or future
competitors; (4) the development of the cloud-based Enterprise Content
Management market; (5) risks associated with Box’s ability to manage its
rapid growth effectively; (6) Box’s limited operating history, which
makes it difficult to predict future results; (7) the risk that Box’s
customers do not renew their subscriptions or expand their use of Box’s
services; (8) Box’s ability to provide timely and successful
enhancements, new features and modifications to its platform and
services; (9) actual or perceived security vulnerabilities in Box’s
services or any breaches of Box’s security controls; and (10) Box’s
ability to realize the expected benefits of its third-party partnerships.

Additional information on potential factors that could affect Box’s
financial results is included in the reports on Forms 10-K, 10-Q and 8-K
and in other filings Box makes with the Securities and Exchange
Commission from time to time, including the Quarterly Report on Form
10-Q filed for the fiscal quarter ended July 31, 2016. These documents
are available on the SEC Filings section of Box’s Investor Relations
website located at www.box.com/investors.
Box does not assume any obligation to update the forward-looking
statements contained in this press release to reflect events that occur
or circumstances that exist after the date on which they were made.

About Non-GAAP Financial Measures and Other Key Metrics

To supplement Box’s consolidated financial statements, which are
prepared and presented in accordance with GAAP, Box provides investors
with certain non-GAAP financial measures and other key metrics,
including non-GAAP operating loss, non-GAAP operating margin, non-GAAP
net loss, non-GAAP net loss per share, billings and free cash flow. The
presentation of these non-GAAP financial measures and key metrics is not
intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP. For more information on these non-GAAP financial
measures and key metrics, please see the reconciliation of these
non-GAAP measure and certain key metrics to their nearest comparable
GAAP measures at the end of this press release.

Box uses these non-GAAP financial measures and key metrics for financial
and operational decision-making and as a means to evaluate
period-to-period comparisons. Box’s management believes that these
non-GAAP financial measures and key metrics provide meaningful
supplemental information regarding Box’s performance by excluding
certain expenses that may not be indicative of Box’s recurring core
business operating results. Box believes that both management and
investors benefit from referring to these non-GAAP financial measures
and key metrics in assessing Box’s performance and when planning,
forecasting, and analyzing future periods. These non-GAAP financial
measures and key metrics also facilitate management's internal
comparisons to Box’s historical performance as well as comparisons to
Box’s competitors' operating results. Box believes these non-GAAP
financial measures and key metrics are useful to investors both because
(1) they allow for greater transparency with respect to key metrics used
by management in its financial and operational decision-making and (2)
they are used by Box’s institutional investors and the analyst community
to help them analyze the health of Box’s business.

A limitation of non-GAAP financial measures and key metrics is that they
do not have uniform definitions. Further, Box’s definitions will likely
differ from the definitions used by other companies, including peer
companies, and therefore comparability may be limited. Thus, Box’s
non-GAAP measures and key metrics should be considered in addition to,
and not as a substitute for, or in isolation from, measures prepared in
accordance with GAAP. Additionally, in the case of stock-based expense,
if Box did not pay a portion of compensation in the form of stock-based
expense, the cash salary expense included in cost of revenue and
operating expenses would be higher which would affect Box’s cash
position.

Non-GAAP operating loss and non-GAAP operating margin. Box
defines non-GAAP operating loss as operating loss excluding expenses
related to stock-based compensation (“SBC”), intangible assets
amortization, and as applicable, other special items. Non-GAAP operating
margin is defined as non-GAAP operating loss divided by revenue.
Although stock-based compensation is an important aspect of the
compensation of Box’s employees and executives, determining the fair
value of certain of the stock-based instruments Box utilizes involves a
high degree of judgment and estimation and the expense recorded may bear
little resemblance to the actual value realized upon the vesting or
future exercise of the related stock-based awards. Furthermore, unlike
cash compensation, the value of stock options, which is an element of
Box’s ongoing stock-based compensation expense, is determined using a
complex formula that incorporates factors, such as market volatility,
that are beyond Box’s control. For restricted stock unit awards, the
amount of stock-based compensation expenses is not reflective of the
value ultimately received by the grant recipients. Management believes
it is useful to exclude stock-based compensation in order to better
understand the long-term performance of Box’s core business and to
facilitate comparison of Box’s results to those of peer companies.
Management also views amortization of acquisition-related intangible
assets, such as the amortization of the cost associated with an acquired
company’s developed technology and trade names, as items arising from
pre-acquisition activities determined at the time of an acquisition.
While these intangible assets are continually evaluated for impairment,
amortization of the cost of purchased intangibles is a static expense,
one that is not typically affected by operations during any particular
period. Box further excludes expenses related to certain litigation
because they are considered by management to be special items outside
Box’s core operating results.

Non-GAAP net loss and non-GAAP net loss per share. Box defines
non-GAAP net loss as net loss excluding expenses related to SBC,
intangible assets amortization, and as applicable, other special items.
Box defines non-GAAP net loss per share as non-GAAP net loss divided by
the weighted average outstanding shares. Box excludes other special
items because they are considered by management to be outside Box’s core
operating results.

Billings. Billings reflect, in any particular period, (1) sales
to new customers, plus (2) subscription renewals and (3) expansion
within existing customers, and represent amounts invoiced for all
products and professional services. Box calculates billings for a period
by adding changes in deferred revenue in that period to revenue.
Billings help investors better understand sales activity for a
particular period, which is not necessarily reflected in revenue as a
result of the fact that Box recognizes subscription revenue ratably over
the subscription term. Box considers billings a significant performance
measure and after adjusting for any shifts in relative payment
frequencies, a leading indicator of future revenue. Box monitors
billings to manage the business, make planning decisions, evaluate
performance and allocate resources. Box believes that billings offers
valuable supplemental information regarding the performance of the
business and will help investors better understand the sales volumes and
performance of the business. Although Box considers billings to be a
significant performance measure, Box does not consider it to be a
non-GAAP financial measure given that it is calculated using exclusively
revenue and deferred revenue, both of which are financial measures
calculated in accordance with GAAP.

Free cash flow. Box defines free cash flow as cash (used in )
provided by operating activities less purchases of property and
equipment, principal payments of capital lease obligations, and
other items that did not or are not expected to require cash settlement
and which management considers to be outside of Box’s core business.
Box specifically identifies adjusting items in the reconciliation of
GAAP to non-GAAP financial measures. Historically, these items
have included restricted cash used to guarantee a significant letter of
credit for Box's Redwood City headquarters. Box considers free cash flow
to be a profitability and liquidity measure that provides useful
information to management and investors about the amount of cash
generated by the business that can possibly be used for investing in
Box's business and strengthening its balance sheet; but it is not
intended to represent the residual cash flow available for discretionary
expenditures. The presentation of non-GAAP free cash flow is also not
meant to be considered in isolation or as an alternative to cash flows
from operating activities as a measure of liquidity.

The accompanying tables have more details on the reconciliations of
non-GAAP measures and certain key metrics to their nearest comparable
GAAP measures.

About Box

Founded in 2005, Box (NYSE:BOX) is transforming the way people and
organizations work so they can achieve their greatest ambitions. As a
leading enterprise content platform, Box helps more than 69,000
businesses, including AstraZeneca, General Electric, P&G and The GAP
securely access and manage their critical information in the cloud. Box
is headquartered in Redwood City, CA, with offices across the United
States, Europe and Asia. To learn more about Box, visit http://www.box.com/

BOX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

October 31,

January 31,

2016

2016

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

167,800

$

185,741

Marketable securities

—

7,379

Accounts receivable, net

85,995

99,542

Prepaid expenses and other current assets

12,770

14,729

Deferred commissions

10,599

12,603

Total current assets

277,164

319,994

Property and equipment, net

113,379

120,492

Intangible assets, net

975

3,895

Goodwill

16,293

14,301

Restricted cash

27,134

27,952

Other long-term assets

8,427

10,854

Total assets

$

443,372

$

497,488

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

9,926

$

9,862

Accrued compensation and benefits

19,172

35,631

Accrued expenses and other current liabilities

20,425

31,926

Capital lease obligations

10,769

4,698

Deferred revenue

179,456

168,051

Deferred rent

410

298

Total current liabilities

240,158

250,466

Debt, non-current

40,000

40,000

Capital lease obligations, non-current

14,707

7,316

Deferred revenue, non-current

13,142

18,362

Deferred rent, non-current

44,640

41,674

Other long-term liabilities

1,851

1,769

Total liabilities

354,498

359,587

Stockholders’ equity:

Common stock

13

12

Additional paid-in capital

937,317

871,491

Treasury stock

(1,177

)

(1,177

)

Accumulated other comprehensive loss

(28

)

(84

)

Accumulated deficit

(847,251

)

(732,341

)

Total stockholders’ equity

88,874

137,901

Total liabilities and stockholders’ equity

$

443,372

$

497,488

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

Three Months Ended

Nine Months Ended

October 31,

October 31,

2016

2015

2016

2015

Revenue

$

102,811

$

78,651

$

288,679

$

217,722

Cost of revenue(1)(2)

27,115

23,630

82,576

61,419

Gross profit

75,696

55,021

206,103

156,303

Operating expenses:

Research and development(2)

29,652

26,324

84,824

75,911

Sales and marketing(2)

66,796

63,972

186,454

178,927

General and administrative(1)(2)

16,999

19,757

49,087

52,904

Total operating expenses

113,447

110,053

320,365

307,742

Loss from operations

(37,751

)

(55,032

)

(114,262

)

(151,439

)

Interest expense, net

(222

)

(30

)

(587

)

(773

)

Other (expense) income, net

(22

)

165

609

57

Loss before provision for income taxes

(37,995

)

(54,897

)

(114,240

)

(152,155

)

Provision for income taxes

238

220

670

420

Net loss

$

(38,233

)

$

(55,117

)

$

(114,910

)

$

(152,575

)

Net loss per common share, basic and diluted

$

(0.30

)

$

(0.45

)

$

(0.91

)

$

(1.27

)

Weighted-average shares used to compute net loss per share, basic
and diluted

128,275

121,796

126,712

120,537

(1) Includes intangible assets amortization as follows:

Three Months Ended

Nine Months Ended

October 31,

October 31,

2016

2015

2016

2015

Cost of revenue

$

506

$

1,431

$

2,804

$

4,010

General and administrative

39

39

116

117

Total intangible assets amortization

$

545

$

1,470

$

2,920

$

4,127

(2) Includes stock-based compensation expense as follows:

Three Months Ended

Nine Months Ended

October 31,

October 31,

2016

2015

2016

2015

Cost of revenue

$

1,986

$

1,272

$

5,328

$

3,164

Research and development

7,730

6,455

21,602

18,021

Sales and marketing

6,744

5,005

18,390

14,030

General and administrative

3,457

2,672

9,750

7,632

Total stock-based compensation

$

19,917

$

15,404

$

55,070

$

42,847

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

Three Months Ended

Nine Months Ended

October 31,

October 31,

2016

2015

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(38,233

)

$

(55,117

)

$

(114,910

)

$

(152,575

)

Adjustments to reconcile net loss to net cash used in operating
activities:

Depreciation and amortization

8,710

9,936

31,515

28,967

Stock-based compensation expense

19,917

15,404

55,070

42,847

Amortization of deferred commissions

4,251

3,974

13,627

11,502

Other

13

457

96

557

Changes in operating assets and liabilities, net of effects of
acquisitions:

Accounts receivable, net

(10,825

)

(10,321

)

13,547

(10,194

)

Deferred commissions

(3,667

)

(3,729

)

(10,073

)

(11,896

)

Prepaid expenses and other assets, current and noncurrent

1,670

1,565

4,107

(25,547

)

Accounts payable

2,353

(6,989

)

2,069

1,879

Accrued expenses and other liabilities

(1,036

)

(937

)

(20,250

)

626

Deferred rent

424

17,616

3,078

21,558

Deferred revenue

9,594

10,798

6,185

21,090

Net cash used in operating activities

(6,829

)

(17,343

)

(15,939

)

(71,186

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of marketable securities

—

—

—

(112,521

)

Sales of marketable securities

—

63,062

240

66,911

Maturities of marketable securities

—

13,492

7,057

20,145

Purchases of property and equipment

(1,892

)

(19,998

)

(13,639

)

(47,842

)

Proceeds from sale of property and equipment

8

—

84

—

Acquisitions and purchases of intangible assets, net of cash
acquired

—

(53

)

—

(271

)

Net cash (used in) provided by investing activities

(1,884

)

56,503

(6,258

)

(73,578

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of initial public offering costs

—

—

—

(2,172

)

Payment of borrowing costs

—

—

(93

)

—

Proceeds from exercise of stock options, net of repurchases of
early exercised stock options

3,388

2,734

7,603

5,148

Proceeds from issuances of common stock under employee stock
purchase plan

REDWOOD CITY, Calif.--(EON: Enhanced Online News)--Box (NYSE:BOX) today announced that it will report financial results for its first quarter, which ended April 30, 2017, following the close of mar... more »